Mr. Grijalva (for
himself, Mr. Conyers, and
Mr. Cummings) introduced the following
bill; which was referred to the Committee
on Education and the Workforce

A BILL

To amend the Higher Education Opportunity Act to restrict
institutions of higher education from using revenues derived from Federal
educational assistance funds for advertising, marketing, or recruiting
purposes.

1.

Short title

This Act may be cited as the
Protecting Financial Aid for Students and Taxpayers
Act.

2.

Findings

Congress finds the following:

(1)

From 1998 to 2008,
enrollment in for-profit institutions of higher education increased by 225
percent, from 553,000 students to 1,800,000 students.

(2)

On average, 86
percent of revenues at 15 large, publicly traded companies that operate
for-profit institutions of higher education came from the Federal Government
through student aid programs.

(3)

In 2009, students
who enrolled at for-profit institutions of higher education received
$30,000,000,000 in Federal Pell Grants and student loans.

(4)

Eight out of the
10 top recipients of Post-9/11 Educational Assistance funds are for-profit
institutions of higher education. For-profit colleges received 37 percent
($4,400,000,000) of all Post-9/11 Educational Assistance funds during the
2-year period of August 1, 2009 through July 30, 2011.

(5)

Six of the top 10
military tuition assistance recipients are for-profit institutions of higher
education. For-profit colleges received half of all tuition assistance
dollars—$280,000,000 out of $563,000,000 spent last year.

(6)

The 15 companies
that received 86 percent of their revenues from Federal student aid programs
spent $3,700,000,000 (23 percent of expenditures) on advertising, marketing,
and recruitment in fiscal year 2009.

(7)

According to
documents obtained by the Committee on Health, Education, Labor and Pensions of
the Senate (referred to in this Act as the HELP Committee), 30
companies operating for-profit institutions of higher education spent
$4,100,000,000 on advertising, marketing, and recruitment in fiscal year
2009.

(8)

An analysis of 8
publicly traded companies that operate institutions of higher education shows
that, on average, they spend 31 percent of expenditures on advertising,
marketing, and recruiting.

(9)

Documents obtained
by the HELP Committee reveal that for-profit institutions of higher education
have created sophisticated marketing plans and employed many third parties as
well as large sales forces specifically tasked with enrolling as many students
as possible, including veterans, servicemembers, and their families.

(10)

In 2010, an
undercover investigation by the Government Accountability Office documented
misleading and deceptive recruitment practices at each of 15 for-profit
institutions of higher education campuses visited. Misleading statements
included information regarding the cost of attendance, transferability of
credits, loan repayment by future employers, job placement, and likelihood of
graduation.

(11)

Documents
produced to the HELP Committee demonstrate that revenue from Federal funds is
used to pay recruiters, who, at some for-profit institutions of higher
education, are trained to exploit emotional vulnerabilities of prospective
students to meet enrollment thresholds.

(12)

Documents
produced to the HELP Committee demonstrate that revenues from Federal funds are
used to pay very large sales staff titled enrollment advisors,
including 8,137, 5,669 and 3,069 of such individuals at 3 large for-profit
companies.

(13)

The number of
enrollment advisors at several for-profit institutions of higher education
examined by the HELP Committee are very disproportionate with the number of
staff engaged in all student support services, including job placement, which
were 3,737, 2,582 and 2,472 at the same 3 for-profit companies.

3.

Restrictions on
sources of funds for recruiting and marketing activities

Restrictions on
sources of funds for recruiting and marketing activities

(1)

In
general

An institution of higher education, or other
postsecondary educational institution, may not use revenues derived from
Federal educational assistance funds for recruiting or marketing activities
described in paragraph (2).

(2)

Covered
activities

Except as provided in paragraph (3), the recruiting
and marketing activities subject to paragraph (1) shall include the
following:

(A)

Advertising and
promotion activities, including paid announcements in newspapers, magazines,
radio, television, billboards, electronic media, naming rights, or any other
public medium of communication, including paying for displays or promotions at
job fairs, military installations, or college recruiting events.

(B)

Efforts to
identify and attract prospective students, either directly or through a
contractor or other third party, including contact concerning a prospective
student’s potential enrollment or application for grant, loan, or work
assistance under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070
et seq.) or participation in preadmission or advising activities,
including—

(i)

paying employees
responsible for overseeing enrollment and for contacting potential students
in-person, by phone, by email, or by other internet communications regarding
enrollment; and

(ii)

soliciting an
individual to provide contact information to an institution of higher
education, including websites established for such purpose and funds paid to
third parties for such purpose.

(C)

Such other
activities as the Secretary of Education may prescribe, including paying for
promotion or sponsorship of education or military-related associations.

(3)

Exceptions

Any
activity that is required as a condition of receipt of funds by an institution
under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), is
specifically authorized under such title, or is otherwise specified by the
Secretary of Education, shall not be considered to be a covered activity under
paragraph (2).

(4)

Federal
educational assistance funds

In this subsection, the term
Federal educational assistance funds means funds provided
directly to an institution or to a student attending such institution under any
of the following provisions of law:

Nothing in this section shall be construed as a
limitation on the use by an institution of revenues derived from sources other
than Federal educational assistance funds.

(6)

Reporting

Each
institution of higher education, or other postsecondary educational
institution, that receives revenues derived from Federal educational assistance
funds shall report annually to the Secretary and to Congress the institution's
expenditures on advertising, marketing, and
recruiting.

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